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Saturday, May 25, 2024

Airport privatization to launch after election

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In Short:

The government plans to privatize six airports, including Bhubaneswar and Trichy, through a 50-year lease to private entities to boost infrastructure and revenue. The move is part of a larger plan to sell AAI’s stakes in major metro airports, generating significant revenue. Private airports have historically outperformed AAI-operated ones, highlighting the benefits of private investment in the aviation sector.

Major Indian Airports to be Offered for Bids in PPP Mode

The state-owned airport operator is gearing up for a major overhaul by inviting bids for the operation, management, and development of 13 airports, including Bhubaneswar, Trichy, Indore, Raipur, Amritsar, and Varanasi, in public-private-partnership mode, according to officials.

New Government, New Plans

A key official mentioned, “The plan is set to roll out once the new government steps in around June. Alongside Bengaluru, the AAI (Airports Authority of India) is also mulling over selling its stake in the Hyderabad airport.”

Revamping Strategy

AAI is considering combining these six airports with seven smaller, less profitable airports such as Kushinagar, Gaya, Hubballi, Aurangabad, Jabalpur, Tirupati, and Kangra.

Future Outlook

The initial phase involves floating a request for proposal to lease these airports for 50 years, with plans to privatize a total of 25 airports. The focus is set on enhancing the infrastructure of both major and minor airports.

Public-Private Partnership Expansion

Last year’s National Monetisation Plan announced intentions to generate significant value by offloading stakes in Delhi, Mumbai, Hyderabad, and Bengaluru airport companies. This includes substantial revenue from leasing AAI-operated airports to private entities.

Financial Impact

AAI’s revenue has seen a considerable boost, with lease revenue from joint venture airports in Delhi and Mumbai reaching 3,020.55 crore. The six PPP airports raked in 683.86 crore in revenue for the fiscal year 2022-23.

Queries to Bengaluru airport and AAI went unanswered at the time of press.

Fairfax holds a majority stake in BIAL (Bengaluru International Airport Limited), with notable percentages owned by Siemens Project Ventures GmbH, AAI, and Karnataka State Industrial and Infrastructure Development Corp.

Control Changes

In recent years, control of major airports has seen shuffles and acquisitions, with significant investments from various entities like Fairfax, GVK Power and Infrastructure, and Zurich Airport.

Private vs. Public Airports

Despite recovering traffic post-pandemic, private airports have outperformed AAI-operated ones, suggesting the potential for enhanced amenities and revenue streams in the future.

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